Bitcoin (BTC) has been quite boring lately, drifting to the right after its post-COVID recovery seemingly without end. But this docile price action is deceptive, as it is likely to end soon—and end with some big fireworks.

We start on the daily chart for a general sense of things. We clearly see that Bitcoin has been, and continues to be compressed in between two trend areas. And in particular, the red trend area happens to be the multi-year downtrend first laid in December 2017.

Packed tightBTC chart by TradingView

The volume trend is what draws our attention here, ebbing and flowing through the past three months and now at a trickle. Such consistently low volume generally signals the end of a consolidation period, and indeed Bitcoin has settled comfortably in the $9400 area during this period.

A lot is at stake here, and we move to the weekly chart to see why. Again we see the red downtrending zone, which is basically the same one we saw on the daily chart. But the smaller blue uptrending zone has been replaced by the extant multi-year one, which marks the bottom of the March massacre in the crypto markets, and is also historically consistent (not pictured).

An important (long) momentBTC chart by TradingView

If Bitcoin were to break down out of its current consolidation zone, we could see price dump back down into the $5000 zone for another test of this uptrend, and another year or so of sideways consolidation within this pattern. We cannot ignore this possibility.

On the other hand, there is the possibility of a break up and out of the multi-year structure. So for, the histogram for this recent period is not looking that bearish, and has not turned into an accelerating downward path.

If we finally turn to the 4-hour for a granular look, we see that things still look very quiet. A slight bump in volume in the last couple of candles isn’t enough to single a buildup—yet. And the RSI/histogram is not telegraphing much of anything clear on this chart.

driftwoodBTC chart by TradingView

The only formation we can point to here is a potential reverse head and shoulders, which would signal a break up. But there are not even bull divergences on the RSI to support this thesis.

Let us not be fooled. Volatility is coming soon, and when it comes it might signal Bitcoin’s direction for the next year. Smart BTC traders/investors will be planning for either contingency.

The views and opinions expressed here do not reflect those of and do not constitute financial advice. Always do your own research.

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